Smith Corp. sponsors a defined-benefit pension plan for its employees. On January 1, 2011, the following...

 

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Smith Corp. sponsors a defined-benefit pension plan for its employees. On January 1, 2011, the following balances related to this plan. Plan assets (market-related value) Projected benefit obligation $500,000 650,000 150,000 Cr. Pension asset/liability Prior service cost 60,000 OCI - Loss 80,000 As a result of the operation of the plan during 2011, the actuary provided the following additional data at December 31, 2011. Service cost for 2011 $ 65,000 Settlement rate 8% 55,000 Actual return on plan assets in 2011 Expected return on plan assets in 2011 40,000 Amortization of prior service cost 10,000 Contributions in 2011 110,000 Benefits paid retirees in 2011 75,000 Average remaining service life of active employees 10 years Required: 1. Using the corridor method, calculate the amount of loss to be amortized from OCI- Loss account in 2011. 2. Complete the pension worksheet provided on the next page for Smith Corp. for the year 2011. Clearly distinguish debit and credit entries. (You may create your own worksheet using Excel or Word.) 3. Prepare the journal entry for pension expense in 2011. Smith Corp. sponsors a defined-benefit pension plan for its employees. On January 1, 2011, the following balances related to this plan. Plan assets (market-related value) Projected benefit obligation $500,000 650,000 150,000 Cr. Pension asset/liability Prior service cost 60,000 OCI - Loss 80,000 As a result of the operation of the plan during 2011, the actuary provided the following additional data at December 31, 2011. Service cost for 2011 $ 65,000 Settlement rate 8% 55,000 Actual return on plan assets in 2011 Expected return on plan assets in 2011 40,000 Amortization of prior service cost 10,000 Contributions in 2011 110,000 Benefits paid retirees in 2011 75,000 Average remaining service life of active employees 10 years Required: 1. Using the corridor method, calculate the amount of loss to be amortized from OCI- Loss account in 2011. 2. Complete the pension worksheet provided on the next page for Smith Corp. for the year 2011. Clearly distinguish debit and credit entries. (You may create your own worksheet using Excel or Word.) 3. Prepare the journal entry for pension expense in 2011.

Answer rating: 100% (QA)

1 Corridor Test Accumulated Net gain or loss at the beginning of year E 10 of larger of PBO or Plan ... View the full answer